Stay on entering into contract

A High Court judge has recently considered a NHS trust's application to lift an automatic suspension on the award of a managed services contract in respect of pathology services. James Goudie QC sets out the key lessons.

In Sysmex (UK) Ltd v Imperial College Healthcare NHS Trust (2017) EWHC 1824 (TCC) Coulson J reiterated the principles of law applicable to lifting the automatic suspension of a contracting authority’s ability to enter into a contract covered by the public procurement regime, as follows:

1. In approaching an application to lift an automatic suspension, the Court should apply American Cyanamid principles: paragraph 12;
2. There are three separate issues to be considered: (i) whether there is a serious issue to be tried; (ii) if there is, whether damages are nonetheless an adequate remedy; and (iii) if damages are not an adequate remedy, where the balance of convenience lies: paragraph 13;
3. The overriding consideration is which course is likely to involve the least risk of injustice if it turns out to be “wrong”, in the sense of granting an interlocutory injunction to a party who fails to establish his rights at trial (or would fail if there was a trial) or, alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial: (paragraph 14;
4. Save in the exceptional circumstances where one party has some kind of simple “knock-out” point, it is not appropriate for the Court to conduct a mini-trial or to endeavour to reach any conclusions as to the strength or weakness of one or both sides’ cases: paragraph 21;
5. If damages are an adequate remedy, that will be normally sufficient to defeat an application for an interim injunction, but that will not always be so: paragraph 22;
6. The Court must assess whether it is just, in all the circumstances, that the claimant be confined to his remedy in damages: ibid;
7. The loss of a particularly prestigious contract or the potential for damage to the unsuccessful tenderer’s reputation may be incapable of compensation in damages: paragraph 23;
8. There is a public interest in the proper procurement of contracts of this sort: paragraphs 25 and 98;
9. However, the public interest in the lawful conduct of public procurements is not necessarily an automatic point in the claimant’s favour: paragraph 26;
10. Delays, whether in the original procurement process, or in the making of the application to lift the suspension, may be relevant to the balance of convenience: paragraph 28;
11. A lengthy passage of time does not equate to a delay, that is something which has taken longer than it should or could have done: ibid;
12. Claims by profit-making organisations are to be distinguished from non-profit making organisations with respect to whether damages are an adequate remedy: paragraph 36;
13. Merely because the contract in question is large and/or prestigious does not mean that a failure to win it cannot be compensated for in damages: paragraph 39;
14. Where there is credible evidence that patient care will suffer if the suspension is not lifted, it will usually be the case that the least risk of injustice will favour the lifting of the suspension: paragraph 72;
15. Costs savings which could be made if the suspension was lifted are a weighty factor: paragraph 74;
16. It is not sensible to require a Court, on an application to set aside the suspension, to deal at the same time with ongoing disputes about disclosure: paragraph 86;
17. It will be only in unusual circumstances that it may be appropriate to vary or modify the suspension: paragraph 92.

James Goudie QC is a barrister at 11KBW.